MANILA, Philippines—(UPDATE) With the government facing a multi-billion-peso revenue shortfall, Malacañang threw its support behind the Bureau of Internal Revenue’s move to impose a five-percent tax on campaign spending.

Executive Secretary Eduardo Ermita, also the interim president of the ruling Lakas-Kampi-CMD party, said on Wednesday the administration would be willing to “even set the example” if only to help boost the government’s revenue collection.

“We are not going to turn our backs on it,” he said in a media briefing. “We will do and we will respond accordingly to what is legal.”

Ermita shot down the idea that Revenue Regulation 8-09 might be used by the administration to harass its political opponents going into the 2010 national and local elections.

The BIR policy requires the collection of taxes on campaign spending, which is one of the agency’s measures to boost government revenue.

“You can be very sure that the administration will not do anything illegal that will somehow mar the conduct of an honest, orderly and peaceful elections in 2010,” Ermita said.

He said fears that the tax policy on campaign spending might be used against the opposition could have been brought up by some quarters to “keep the administration aware that they are ever vigilant in what (it) is capable of doing to the disadvantage of the political opponent.”

Besides campaign spending, retailers in upcoming holiday bazaars will also be under the radar of the BIR to improve revenue collection.

“There will be (a) high-profile tax monitoring system during the Christmas shopping season (to cover) the setting up of bazaars and retail establishments and their issuance of receipts,” Senior deputy commissioner Joel Tan-Torres, BIR officer in charge, had said.

The agency was supposed to collect P596.2 billion in the last nine months to September, but fell short by P39 billion.

The measly collection apparently forced then BIR commissioner Sixto Esquivias IV to resign last week.

“Despite my most earnest and diligent [effort], I am unable to consistently meet targets of [the] agency. Although different circumstances have contributed to the shortfall of collections, I am taking full responsibility,” he said in his resignation letter.